by Jon Scaccia December 11, 2024

Imagine this: You’ve just endured a medical emergency, and as you’re recovering, a staggering bill lands in your mailbox. Until recently, this scenario was far too common for Americans seeking emergency care. Enter the No Surprises Act (NSA)—a law enacted to protect patients from unexpected, out-of-network medical bills and introduce a new system for resolving payment disputes between insurers and providers.

But has the law delivered on its promises? A recent analysis of arbitration outcomes under the NSA reveals a surprising trend: providers are winning the vast majority of disputes, with private equity-backed groups leading the charge. This blog delves into the findings, what they mean for the healthcare system, and the potential ripple effects on costs, equity, and provider practices.

The Research at a Glance

The NSA established an Independent Dispute Resolution (IDR) process, where an arbiter selects either the health plan’s or provider’s payment offer based on several factors, including the Qualifying Payment Amount (QPA)—a median rate set by insurers for a given service in a particular market.

Researchers analyzed public data from 2023, focusing on disputes involving moderate to severe emergency medicine visits, which were the most contested services under the NSA. Key findings include:

• Providers won 86% of cases.
• The average winning payment was 2.7 times the QPA.
• Private equity-backed providers had higher win rates (90%) and payment awards compared to other providers.
• A handful of health plans and provider groups dominated disputes, with UnitedHealthcare and TeamHealth accounting for nearly half of all cases.

Why These Findings Matter

These outcomes defy initial expectations that payments would align closely with the QPA, a benchmark designed to reduce healthcare costs. Instead, payments in arbitration are not only significantly higher than the QPA but also well above Medicare rates.

Private Equity’s Outsized Role

Private equity (PE) firms, known for their aggressive strategies in maximizing financial returns, are disproportionately represented among successful providers. Groups like TeamHealth and SCP Health leveraged the IDR process to secure significantly higher reimbursements. Their dominance raises important questions about equity and market dynamics.

• Why are PE-backed groups so successful?
  Sophistication in navigating arbitration, legal resources, and strategic offer-setting likely play a role.
• What are the risks?
  Higher payments awarded to PE-backed providers could incentivize further consolidation, reducing the number of independent physicians and driving up costs.

Broader Implications

1. The Patient Perspective

The NSA aims to shield patients from financial strain, but higher arbitration outcomes could indirectly affect insurance premiums. If insurers pay more through arbitration, those costs may trickle down to consumers.

2. Health Plan Challenges

Insurers are losing most arbitration cases, especially against PE-backed providers. To adapt, they’ve started increasing their offers—but not enough to reverse the trend. This raises questions about the long-term sustainability of health plans in the current system.

3. Regional Disparities

Certain states, like Florida and Texas, dominate the arbitration landscape, while populous states like California and New York see fewer disputes. This geographic imbalance could reflect variations in state regulations, market dynamics, or provider behaviors.

Practical Takeaways for Public Health

• For Policymakers: Consider revising QPA calculation methods to better reflect market realities and curb excessive awards in arbitration.
• For Providers: Independent physicians should evaluate the benefits and risks of private equity partnerships in light of arbitration trends.
• For Insurers: Strengthen negotiation strategies and assess whether higher initial offers might reduce arbitration volume and costs.

What’s Next?

The IDR system is still in its infancy, and stakeholders—providers, health plans, and policymakers—are watching closely. Key areas to monitor include:

• Evolving Arbitration Trends: Will providers and insurers adjust their offers as they learn from arbitration outcomes?
• Policy Adjustments: Will federal or state governments intervene to address concerns about rising costs and market consolidation?
• Market Dynamics: Could PE-backed groups gain even more market share, or will independent providers find ways to compete effectively?

The long-term impact of the NSA remains uncertain, but it’s clear that arbitration outcomes are reshaping the healthcare landscape.

Join the Conversation

What do you think about the findings? Do they suggest that the NSA is working as intended, or do they highlight areas for improvement?

• How can policymakers strike a balance between fair provider reimbursement and controlling healthcare costs?
• What role should private equity play in shaping the future of healthcare?
• How can insurers improve their performance in the IDR process?

Share your thoughts in the comments or on social media with the hashtag #NoSurprisesAct.

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